19 western corporation has taxable income of 390 000 and pretax accounting income of 4310546

19) Western Corporation has taxable income of $390,000 and pretax accounting income of $363,000. The company's income tax rate is 35%. The entry to record the income tax includes a:

A) debit to Income Tax Expense $136,500.

B) debit to Deferred Tax Asset $127,050.

C) debit to Deferred Tax Asset $9,450.

D) credit to Income Tax Payable $127,050.

20) The estimated value of a company's stock is less than the current market value of the company. The appropriate investment decision should be to:

A) buy the company's stock.

B) hold the company's stock.

C) sell the company's stock.

D) purchase the bond's that the company has issued.

21) Current earnings per share information is as follows:

Continuing operations


Discontinued operations


Extraordinary items



The interest capitalization rate is 7.5%. How much should an investor pay for a share of stock?

A) $50.00

B) $58.00

C) $64.00

D) $70.00

22) The gain or loss on the disposal of a business segment is shown on the income statement as:

A) an extraordinary item.

B) part of discontinued operations

C) part of income from operations.

D) other gains or losses.

23) The disposal of a segment of a business is called:

A) an extraordinary item.

B) other expense.

C) a sales transaction.

D) discontinued operations.

24) The discontinued operations section of the income statement refers to the:

A) loss on products that did not sell.

B) discontinuance of a product line.

C) disposal of out of date equipment.

D) disposal of a segment of a business.

25) The loss incurred as a result of writing down obsolete inventory should be reported as:

A) part of discontinued operations.

B) an operating expense.

C) other expenses and losses.

D) an extraordinary item.

26) Charming Charlie's, Inc. is going to discontinue one of its manufacturing divisions. At the time of discontinuance, the division's assets with a book value of $1,000,000 are sold for $750,000 and operating income amounted to $145,000. Ignoring income taxes, what total amount should be reported on the income statement as discontinued operations?

A) $105,000 loss

B) $250,000 loss

C) $395,000 loss

D) $145,000 gain

27) The following items are extraordinary items EXCEPT:

A) newly enacted laws.

B) natural disasters.

C) expropriation of company assets by a foreign government.

D) losses on a failing product line.

28) Which of the following would be considered an extraordinary item?

A) Losses from a labor dispute

B) Losses from a natural disaster

C) Writing-down inventory to lower-of-cost or market

D) Losses from the sale of property

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Cathy, CS.